CAFX Market Update 17/12/2021

Good Morning,

Welcome to our daily market update where we help keep you informed on the latest happenings in the world of FX and show you what this means for the Mighty Aussie Dollar.
If you have any questions or would like anything further explained, please don’t hesitate to reach out to your account manager or email info@cafx.com

Key Data Being Released Today Wednesday the 17th of December 2021

  • JPY – Monetary Policy Statement. BOJ Policy Rate forecast -0.1%
  • GBP – Retail Sales m/m forecast 0.8%
  • EUR – Final CPI and Core CPI y/y forecast 4.9% and 2.6%
  • Overnight
    • USD – FOMC Member Waller speaks

AUD/USD rallied for the second straight day and trading at three-week high. The AUD/USD pair maintained a strong positive tone through the European market and was last seen trading around 0.7215-0.7220.
Several factors assisted the AUD/USD pair to capitalise on the overnight rally from the 0.7092 support and traded higher for the second successive day on Thursday. Better than expected employment figures from Australia, along with risk-on sentiment acted as a tailwind for the perceived riskier Aussie. Unemployment rate contracted by more than forecasted to 4.6% with 366.1k new positions in November, much better than the 200k forecasted.
On the other hand, with the FOMC meeting yesterday morning, the market perceived it as a “relief” with the overbought USD being sold off after the announcement. The markets had a expectation before the meeting that the FOMC could be more hawkish and might even raise interest rate as early as March.

  • Feb doubles the pace of tapering to $30 billion a month
  • Median forecast shows three rate hikes in 2022, three in 2023
  • Fed says supply/demand imbalances contribute to inflation

The US dollar extended the post-FOMC retracement slide from a 16-month high and remained miserable through the European session. This in turn, provide an additional boost of the AUD/USD pair and allowed bulls to clear the 0.7180-85 strong resistance level

AUD/USD Short-term technical outlook
The AUD/USD pair is bullish as per the 30 min pivot analysis chart, trading above the pivot point of 0.7176.
50 MA shows there is still some opportunity to topside but remains bearish according to the 200 MA.

Major Global Markets

  • Stocks
    • S&P Closed at 4672
    • NASDAQ closed at 15,565
    • ASX 7327
  • Currencies
    • AUD/USD – At the time of writing this report trades at 0.7179
    • AUD/JPY – At the time of writing this report trades at 81.61
    • AUD/CNH – At the time of writing this report trades at 4.5790
    • DXY (US Dollar Index) – At the time of writing this report trades 96.00
    • AUD/EUR – At the time of writing this report trades 0.6335
  • Bonds
    • US 10-year Bonds are currently at 1.41%
    • Aussie 10-year Bonds are currently at 1.57%
  • Commodities
    • Iron Ore 62% – Trading at USD/T 108.50
    • Gold – trading at USD/OZ 1,799.32
    • Brent Crude Oil – 74.64

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